Deck 6: Strategy Formulation: Corporate Strategy

Question 1

Which kind of corporate strategy deals with the manner in which the firm coordinates activities and transfers resources and cultivates capabilities among product lines and business units?

A) portfolio strategy
B) directional strategy
C) parenting strategy
D) cooperative strategy
E) functional strategy

Answer 1

C

Question 2

Adding a related or complementary product to a corporation's business units is called

A) concentration.
B) horizontal growth.
C) concentric diversification.
D) vertical growth.
E) conglomerate diversification.

Answer 2

C

Question 3

Which strategy is descriptive of a corporation in a mature industry facing a drop in its attractiveness, opting to decrease short-term discretionary expenses to maintain profits at a certain level?

A) pause strategy
B) no change strategy
C) retrenchment strategy
D) growth strategy
E) profit strategy

Answer 3

E

Question 4

A disadvantage of vertical growth is that it

A) creates exit barriers.
B) improves coordination of activities.
C) increases the cost of improvement of coordination and control.
D) creates entry barriers.
E) avoids time consuming tasks.

Question 5

Which one of the following strategies is most frequently used in corporations?

A) stability
B) growth
C) consolidation
D) retrenchment
E) renewal

Question 6

A firm's expansion into other geographic locations and/or increasing the range of products and services offered to current markets is called

A) forward vertical growth.
B) diversification
C) backward vertical growth.
D) captive company strategy.
E) horizontal growth.

Question 7

According to the BCG growth-share matrix, the key to success is

A) effective management.
B) competitive positioning.
C) innovative initiative.
D) R&D.
E) market share.

Question 8

Growth through diversification out of an industry into an unrelated industry is called

A) concentration.
B) horizontal growth.
C) concentric diversification.
D) vertical growth.
E) conglomerate diversification.

Question 9

The growth-share matrix of the Boston Consulting Group suggests that the excess cash being generated by "cash cows" should be used to fund

A) "dogs."
B) "question marks."
C) "stars."
D) "white knights."
E) "buckets."

Question 10

Which international entry strategy involves building a manufacturing facility and distribution system from scratch?

A) franchising
B) joint venture
C) green-field development
D) turnkey operation
E) management contract

Question 11

New products which are typically introduced in a fast-growing industry are called

A) cash cows.
B) lost leaders.
C) dogs.
D) question marks.
E) stars.

Question 12

Which kind of corporate strategy deals with the firm's overall orientation toward growth?

A) portfolio strategy
B) directional strategy
C) parenting strategy
D) cooperative strategy
E) functional strategy

Question 13

Which strategy involves giving up management of the firm to the courts?

A) liquidation
B) bankruptcy
C) diversification
D) divestment
E) consolidation

Question 14

In the Boston Consulting Group's growth-share matrix, the relative competitive position of a product, division, or corporation is defined as

A) its market share.
B) its gross sales divided by its market share.
C) its market share multiplied by that of its nearest competitor.
D) its market share divided by that of the smallest other competitor.
E) its market share divided by that of the largest other competitor.

Question 15

Which kind of corporate strategy deals with the industries or markets in which the firm competes through its products and business units?

A) portfolio strategy
B) directional strategy
C) stability strategy
D) cooperative strategy
E) functional strategy

Question 16

Which international entry strategy involves constructing a manufacturing facility for a fee?

A) franchising
B) joint venture
C) green-field development
D) turnkey operation
E) management contract

Question 17

Which is the opposite of a vertical growth strategy?

A) horizontal growth.
B) concentration
C) diversification
D) acquisition
E) outsourcing

Question 18

Which strategy specifies the firm's overall direction in terms of its general orientation toward growth, the industries or markets in which it competes, and the manner in which it coordinates activities and transfers resources among business units?

A) corporate
B) functional
C) divisional
D) organizational
E) business

Question 19

What is a turnaround strategy?

A) A form of divestment and is appropriate when corporate problems can be traced to the poor performance of an SBU or product line.
B) Occurs when the corporation becomes "captive" to another firm.
C) Emphasizes improving operational efficiency and is appropriate when a corporation's problems are pervasive, but not yet critical.
D) Occurs when a corporation liquidates all its assets.
E) It involves adding different products or divisions to the corporation.

Question 20

Which strategy is most appropriate as a temporary strategy to enable a corporation to consolidate its resources after prolonged rapid growth in an industry now facing an uncertain future?

A) pause strategy
B) no change strategy
C) retrenchment strategy
D) horizontal strategy
E) profit strategy

Question 21

Which of the following is defined by GE as one of the variables forming business strength/competitive position?

A) industry profitability
B) competitive diversity
C) market growth rate
D) market size
E) market share

Question 22

Business firms that compete with each other not only in one business unit, but in a number of related business units are said to be engaging in

A) oligopolistic competition.
B) strategic competition.
C) multipoint competition
D) laissez-faire competition.
E) horizontal competition.

Question 23

Corporate parenting generates corporate strategy by focusing on

A) the core competencies of the parent corporation and on the value created from the relationship between the parent and its units.
B) the cash flow among its business units.
C) whether a business unit should be growing, stabilizing, or retrenching.
D) acquiring distinctive competencies in the marketplace.
E) differentiating its activities into separate units and integrating these activities through complex integrating mechanisms.

Question 24

Which of the following is NOT one of the advantages of portfolio analysis?

A) The graphic depiction facilitates communication.
B) It provides the basis for impartial objectivity from which to make decisions.
C) It encourages top management to evaluation each of the corporation's businesses individually.
D) It raises the issue of cash flow availability for use in expansion and growth.
E) It stimulates the use of externally oriented data to supplement management's judgment.

Question 25

A corporate strategy that cuts across divisional boundaries to build synergy across business units to improve the competitive position of one or more business units is called

A) vertical strategy.
B) horizontal strategy.
C) hierarchical strategy.
D) portfolio strategy.
E) pyramid strategy.